creek, now a federal office facility, as the hart-dole-inouye federal center, senator inouye told the audience all of us have chapters in our lives, milestones. my important -- my most important chapter, he said, was a battle creek chapter. this is where i learned what democracy was all about. wherei learned what america wasl about. -- where i learned what america was all about. to impart any lessons about america on dan inouye would have been an honor but we may have taught him pales in comparison to what he tots. a few years ago danny told an audience that our greatness as a nation lies in part in our willingness to recognize the flaws in our past, including our treatment of japanese-americans, and our determination in whatever limited way we could to

make amends. dan inouye served his country because of his dream of what we could be, a nation unbound by our all-too-human failings. he believed to his core that we are able to shed old prejudices and that our nation, de despiter flaws, shines with such bright promise that we can inspire remarkable service and sacrifice. a nation so great that those we treat with disdain or even hatred can respond with love that knows no limit. love is powerful as the love that dan inouye showed for all americans and for the very idea of america. i'm so grateful for the lessons that danny taught me, so grateful for his friendship. barb and i send our deepest condolences to irene and all of danny's family, to the people of

hawaii, and to all of those touched by this remarkable man. mr. president, i yield the floor. i note the absence of a quorum. the presiding officer: the clerk will call the roll. 0. quorum call: mr. coats: i ask that the call of the role be dispensed with. the presiding officer: without objection. mr. coats: mr. president, i have not yet filed but i plan to shortly ae an alternative amendt to the emergency supplemental, which is on the floor and in the process of being debated. i would like to explain what it is that i am going to file and what it does and explain the rationale behind it. mr. akaka: will the senator quelled for a a question? -- mr. leahy: will the senator yield for a question? mr. coats: i would be happy to yield. mr. leahy: it is ming that you

are not going to -- it is my understanding that you are not going to seek action on it now, it is simply to file it? mr. coats: that is my intention. mr. leahy: thank you. mr. coats: the senator from vermont is correct. i don't intend to take any action on this now. i know there are events planned for tonight. we are in the middle of a mourning for our colleague as well. but i systemly wanted to explain for the record -- but i simply wanted to explain for the record what it is we're attempting to do here. all of us are sensitive to the pain and the damage incurred by those in the northeast due to the catastrophic -- clearly catastrophic record-proportion hurricane that hit that sector of our country just weeks ago. and clearly that is something that falls in the category of an emergency, it goes beyond the ability of state and local

jurisdictions to address with their own resources. they will participate in the recovery -- and they have. it's remarkable in this country virtually no state, no senator can stand and sumly say, well, we haven't been touched and not understand the need for the response that comes from disasters, whether they be tornadoes like occurred in my state of indiana just this past spring. we needed emergency help and response, and we received that. whether it is flooding that has occurred throughout the middle west and in other parts of the country that has caused a tremendous amount of damage. terror attacks such as 9/11, oklahoma city, in this case hurricanes -- and we've had a number of those. katrina stands in our minds, but irene and on and on it goes --

sandy being the latest. and this one was truly of monumental proportion and create add lot of damage. and, therefore, a federal response is needed and necessary, if we're going to begin to have an adequate recovery, get people back too work and back in their homes, businesses up and growing again and working. and the bill that is currently on the floor for us here attem attempts to do that. now, some of us were somewhat staggered by the initial number, $60.4 billion. that may not be enough. that may be too much. but in the short amount of time that we've had to try to put all the estimates together in terms of what might be needed, what we have -- senate republican appropriations members attempted to do is separate that from what is immediately needed -- immediate laid being from the time of the storm through march

27 -- to attend to those first responders, those initial responses that need to take place, the whole raft of things that run the gamut from debris cleanup to repairing damaged and flooded facilities, destroyed homes, public facilities and so forth, but to try to go through and separate the immediate and make sure that that measure of support is quickly and as expeditiously brought to the area to address the problem. from those longer--term projects and interests that have been proposed. now, when our committee met with i think, up to ten senators from the affected states testifying, we heard a number of suggestions about a number of things that ought to be incorporated in this legislation.

mitigation was one major issue. mitigation simply is preparing for the next storm so we can -- we can mitigate or lessen the damage that occurred from the storm that we just incurred. but mitigation is a long-term project. it's not something that can be immediately entered into of the and interestingly enough, on the proposals that were presented before the committee, many were contradictory. some thought that burying wires underground would prevent obviously try limbs from falling and take power. that in a city like a major metropolitan area or efor that r enormous city is an expensive project. while that seemed to make sense, one of the experts testifying said, wait a minute. the flooding that occurred with this goes in and would corrode

the piping and corrode a lot of the systems and the switches and that might not be the best thing to do. i don't know whether that's better to do or not better to do. but it's certainly something that needs to be examined, carefully vetted before we commit to that type of project. others said we'd rebuild the sand dunes and sand islands offshore to provide barriers. in other words, the piece -- i think it was in "the new york times" that basically said, this has shown some real promise in terms of protecting areas by having sand barriers off the coast. other experts came in and said, well, yes, 1250eu78 sometimes tt workers and sometimes it doesn't work and you have to be careful where and how you build these. it's not the panacea. it's not the be all and end all of how you prevent this type of damage, but it clearly is something that we ought to look at. clearly something we ought to the examine.

but making a decision now in the weeks -- aftermath of the storm -- here we are just days from adjourningment -- and saying, this is why we need $13 billion toward mitigation projects without vetting those projects, without examining those, having experts look at it and tell us what they think would work, houghowmuch it would cost, sette priorities of what ought to be first, what ought to be done and what perhaps might not, and be postponed, all of that requires a process. and if we're he going to be responsible to the taxpayers' dollars at a time of this fiscal crisis -- and particularly now -- it seems to me the loss logical and responsible way to move forward here is identify the immediate needs and provide the immediate funding to address those needs. and, secondly, on those that -- needs that are longer-term, go

through a process. that's why we have committees. that's why we have procedures in place to identify how best to move forward and spend the taxpayer dollars in a useful way that doesn't turn out to be a waste of money and deny us the opportunities to do the mitigation or other repairs that may be needed. the additional funding, of course -- this is a short-term proposal. it goes through march the 27th. it addresses those needs that fall in that category that meet the criteria of what we set out when we told our staff on the aeption pros committee to go -- on the aeption pro pros -- on te aprongses committee to go -- on the appropriations committee to go through and separate that of what was needed now from what could be dong later. that criteria excluded funding

not related to sandy. now, there is -- there is a long list of requests out there for previous disasters, mitigation was for future disasters that may or may not come. so on mitigation we said, let's set that aside for later deliberation. on nonrelated issues such as cleaning up tsunami debris on the west coast, those -- those expenditures put in this $60.4 billion proposal by the administration and brought to this senate floor, if it's not related directly to this storm, let's set those aside for the procedures that is it was being dealt with before sandy occurred or put those procedures in place to deal with it -- to deal with it afterward. so unrelated items and

unsubstantiated items, those where all the facts weren't in, where these were estimates that had not been certified and not substantiated in a way that i think gives us the -- puts us into a position to make the correct decisions in terms of going forward. and so under that criteria, we came up with a proposal that totals -- it's a little bit of a work in progress -- but totals around $24 billion. mr. leahy: mr. president? mr. coats: so members here -- i'd be happy to yield, but i'd like to finish my remarks, if i could, and then i know we all have time commitments. mr. leahy: i'm only going to make a very short unanimous consent request, if i can. mr. coats: i will be happy to yield. mr. leahy: i'd ask unanimous consent that upon the completion of the distinguished senator's remarks that the senate stand in recess subject to the call of the chair. ferraro is there objection? -- the presiding officer: is there objection?

without objection, so ordered. the senator from indiana. mr. coats: mr. president, the concept behind this, of course, is to be as careful as we can with the taxpayers' money and make sure that each dollar spent is spent on something that has been thoroughly examined and looked at and vetted and scrubbed and determined to be necessary going forward. we have to determine the share -- cost share for the state and local communities, what that percentage ought to be that comes from the state. we have to -- and the local communities. -- as opposed to the federal government. we have to determine how to best go forward with the best project that can hopefully prevent future damage, should a second storm or subsequent storm occur. we have to look at a whole number of factors here and make judgments. that's what we're elected to do. when the taxpayer sends their money in to the federal

government, they don't want us to just throw up a number and throw some wish list out and throw out money at unsubstantiated and eelly unscrubbed -- and really unscrubbed projects that are proposed. so i'm not suggesting here that everything in the proposal, the $60.4 billion, is not necessary. i'm simply saying, give us some time -- at least this three months through march 27 -- to have our cheats an committees ae experts look and make sure it is substantiated. we've removed all o the nonrelad and unmitigated from the proposal. i could go through some examples. i don't think i need to do that. when you look at the various categories that this falls in, sometimes we matched exactly what it was in the

administration's bill. saying this is an accurate number. flood insurance, for instance, we require people living in flood zones to buy flood insurance. they buy the flood insurance and they're looking for their check. so if the estimate has been made and it's been made actuarially and through the procedures of fema and all those evaluating the costs and the decision is made and the number is determined and certified, then a check is written and those people can move on with their lives. that's an immediate need. we can't tell people pay your premium and we'll find a way to get your check to you a year from now. this is an immediate need. in that regard, we have matched their request made by the flood insurance program to provide the borrowing authority so that they can cut those checks. this is christmas, after all. and whether it's christmas or the middle of the year, those

people need to get their lives back together and we want to get that money to them. as you go down the list here of the categories and compare what we've provided and what has been provided in the larger bill, you find, i think, congruence in a number of areas. but in a number of other areas which i've skwrepblz here in terms of -- generallyized here -- generalized here, all these need to be put together, plans need to be vetted and approved. they are not necessary to provide the necessary immediate need aeupbd that is for the people that are suffering from the consequences of this storm. if you go through all that and scrub it, we arrive at a considerably lower number. but i want it said here that this number, while higher than

some would like and lower than others would like, is a thought-through, carefully thought-through reasonable number to take care of needs for now through this christmas season and all the way to march 27. this congress will then revisit. and during that time, that matter and what else is needed. but during that time we'll be able to also carefully work through the estimates, substantiate those estimates, certify that. and then i think obviously those proposing will have a much better foundation to stand on in terms of what they're requesting. and those of us who are trying to be very careful with the taxpayers' dollars will be able to assert or state why we think that this may not be necessary at this time or perhaps doesn't fall in the category of being related to sandy or is thrown out. we all know when some emergency supplemental comes to the halls

of congress, a lot of people reach in the pocket, pull out their wish list waiting for the next train. it has to be something. we'll move through quickly. has to be signed by the president because it's designated as an emergency. and throw on their wish list of unresolved, unfunded projects that perhaps are legitimate, perhaps may be just earmarks or something that needs a train to hook on to in order to get past. that's what we want to try to avoid. so, as i said, i will be filing this amendment which hopefully will be seen as an alternative to give members a choice in terms of how best to move forward in dealing with this legitimate supplemental emergency provision. and with that, mr. president, i yield the floor. the presiding officer: pursuant to the previous order, the senate now stands in recess

subject to the call of the chair. recess: if we turn away from the needs of others we align ourselves with those forces that are

bringing about this suffering. >> what happens if we ought to take advantage of it. >> obesity in this country is nothing short of a public health crisis. >> moi they stand up and tell me when someone had their own agenda. >> why i think they served as a window on the past to what was going on with american women and. >> she becomes the chief confidante. in a way they can trust. >> many of the women who were first lady's a lot of the more writers, journalists. >> they are in many cases were with their husbands in many cases because they are not first and foremost defined by political ambition. >> dolly was politically at up

to and savvy. >> dolley madison loved every minute of it. monroe absolutely hated it. >> you can't rule without including what women want and have to contribute. >> in the statement there was too much looking down and i think it was a little too fast and a change of pace. >> yes, ma'am. estimate is probably the most tragic of all of our first ladies. >> she made a note in her memoir that she said all i, myself, never made any decision. i only decided what was important and when to present it to my husband. you stop and think about how much power that is, it's a lot of power. >> part of the battle against cancer is to fight the fear that

accompanies the diseased. >> she transformed the way that we look at these bugaboos and make it possible for countless people to survive as a result. i don't know how many presidents realistically have that kind of impact on the way we live our lives. >> just walking around the white house grounds, i am constantly reminded about all of the people that have lived there before, and particularly all of the women. >> first lady's influence and image a new series on c-span produced in collaboration with the white house historical association starting presidency february 18th. >> defense secretary leon panetta was the luncheon speaker yesterday at the national press club. he discussed the future of the u.s. and military in afghanistan. also if automatic budget cuts

take effect next month. this is an hour. >> good afternoon and welcome to the national press club. my name is theresa werner and by the 105th president of the national press club. [applause] we are the world's leading social organization for journalists committed to our profession's future through our programming and events such as this while fostering a free press worldwide. for more information about the national press club, please visit our web site at www.press.org. to donate to the programs offered to the public through our national press club journalism institute, please visit press.org/institute. on behalf of members worldwide,

i'd like to welcome the speaker and those of you attending today's event. our head table includes tests of the speaker as well as working journalists to our club members. and if you hear applause and our audience we would note that members of the general public are attending, so it isn't necessarily evidence of a lack of journalistic objectivity. i also like to welcome our c-span and public radio audiences. our luncheons are also featured on our member produced weekly podcast from the national press club available on itunes. you can also follow the action on twitter using #npclunch. after the speech concludes we will have a q&a and i velazquez many questions as time permits. now i would like to introduce the head table guest, and i ask each of you here to stand up briefly as your name is announced. from your right, jim michaels, defense correspondent for usa

today. maryland, national public radio. camille, defense department producer al jazeera english. josh rogen, staff writer, foreign policy magazine. george little, defense secretary of special assistance for public affairs. managing editor of "the washington post." dr. ashton carter, deputy secretary of defense. allyson fitzgerald, a freelance journalist and the chairwoman of the speaker's committee. i'm going to speak this -- skip the speaker for a minute. adana, reporter for usa today and past president of the national press club and speakers' committee organized today's luncheon. dr. jim miller, undersecretary of the defense policy. larry moffey editing manager army magazine.

john, past president of the national press club and former commander of american legion post number 20 at the national press club. joe, incoming editor-in-chief, aviation week and past chairman of the national press club board of governors. paul schenck minn, national security reporter, u.s. news and world report. [applause] just 18 months ago our guest today leon panetta presented as the cia director over the one of daring operations in the country's history. the operation spier their lead on osama bin laden secret compound in pakistan. three days ago defense secretary leon panetta landed in turkey where he signed an order that was then patriot missile battles and troops to operate them to the turkish border.

a stark warning to the syria's president bush are al-assad to cease the air strikes and fighting against the rebels that have played into the turkish territory. we can't spend a lot of time worrying about whether that secretary panetta said dr. words. but in an interview with esquire, he said that he invited kim jong il over for dinner and he cooked for him, served him a glass of moreni and tried to understand how he thinks. clearly that all the loving secretary of defense is a complex man. his list of accomplishments over 74 years span two branches of government, education and even a little bit of labor on his california ranch. before taking office as the 23rd secretary of defense on july 4th, 2011, secretary panetta served more than two years as the cia director.

after three years as the chief of staff to president clinton, secretary leon panetta and his wife could directed the leon and sylvia panetta institute for public police at california state university at monterey bay a nonpartisan center to promote public service. he served eight terms in congress rising in 1989 to the chairman of the house budget committee. that set the stage for his next job, president clinton's director in the office of management and budget. today we hope to hear more about a raid that killed osama bin laden, the role of the modern military in america's foreign policy and what's next on secretary panetta's agenda. please join me in welcoming to the national press club, secretary defense leon panetta. [applause] >> thank you very much, theresa,

for that kind introduction and for the invitation to be here today. i look forward to the opportunity to go back in the valley. i told the story before but it makes the point when i was young my father when he first planted that walnut orchard as it grew, she would go around and shake each of the branches and my brother and i would be underneath cracking walnuts. when i got elected to congress, my i italian father said you have been well trained to go to washington. [laughter] because you have been dodging nuts all your life. [laughter] [applause] it was great training. i've had the opportunity to be

here at the press club, and obviously some of my past jobs as a member of congress and then as the chief of staff. in those jobs, words were both my weapon and my shield. in his job as the secretary of defense i have more going for me. but in a democracy, the words remain the most powerful weapon in our arsenal and it is for that reason it is an honor for me to again be at the national press club. i've long had a deep and abiding respect for the washington press corps. we play an essential role in making our democracy strong by

holding leaders and institutions accountable to the people they serve. as secretary defense or in my past jobs i learned that it was important to be accessible to the press and transfer and with them with regards to the issues and challenges that confront. in this job i've tried to be as accessible as i can to the press corps to engage regularly with reporters and to encourage every senior officials on the department to do the same. it is an especially important time to communicate our vision and our priorities as a department, because as i have said time and time again over the past year i believe that we

are at a strategic turning point. after more than a decade of the war the standard program of conflict in the history of the united states in. at the beginning of 2012 president obama and the military civilian leaders of the department came together to publicly release the new defense strategy it was designed to help the military effective navigate the turning point and prepare for the future under that strategy it was to reshape the force of the 21st century, to try to meet the new security challenges that we are confronting in this world and try to help the country at the

same time reduce the deficits that we are confronting and we were handed in the budget control to reduce the defense budget by $487 billion over the next decade almost half a trillion dollars. based on my own budget experience at the time. the approach is to simply not come across the board and holler about the forced but to try to develop a strategy for what is it that we want the defense department to be not just now but going into the future as well. and that was the purpose we developed the strategy. as the year 2012 draws to a close, today i want to describe the strategic environment that is shaping our future plans, the progress we have made towards

implementing the strategy and if the last that we face as we work every day to keep america safe and secure before i continue, let me pay tribute to the couple people here who join me at the head table. my deputy secretary has played and continues to play a crucial role in helping me and the dod to develop and implement a strategy, and i deeply appreciate his dedication and commitment to the department, and i also want to pay tribute to my undersecretary for policy, jim miller, who is also here, who also worked very hard on that strategy to ensure that we develop the right strategy for the future, and i should also say mardy dempsey and all of the

members' hour service chiefs, members of the joint chiefs of staff, all participated, they all participated in a kind of unprecedented effort to try to openly discuss what were the best steps we could take for the future. this was a time of historic change for the united states military one year ago today soldiers from the first calvary division crossed out of iraq into kuwait as part of the last convoy of u.s. troops to leave iraq. that war came to an end. last year, we also participated in a complex but successful omission that helped them down

gadhafi so it was a complex operation when you have that many nations involved in the mission, how did you decide to target's and determine who goes after those targets and yet, we were able to bring that kind of coordination together and serve to nato and the united states very well in that effort and it proves i think very much a model for how we should approach the future if we have to face that kind of a situation again. our military and intelligence operations, that's one of the things i'm very proud of over the last four years is the integration between intelligence and military operations when it comes to coping after terrorists over the last year, as a result of those operations, we continue to significantly weaken's al qaeda's leadership and put real pressure on their affiliate's. we are also now working to bring

the conflict in afghanistan to a successful transition by the end of 2014. last week i made a trip to afghanistan. i had a chance to sit down with all of our military commanders throughout the region, throughout the country. i also went to kandahar and met with our military commanders and also had the opportunity to meet with the afghan leaders as well. all of them -- all of them believe that we have fundamentally turned the tide in that effort after years in which we lack the right strategy and the necessary resources to try to achieve the mission that we were in marked on. we now have a plan in place, a campaign plan endorsed in chicago by nato that has strong international support. we have reversed a five-year trend of growing violence. the taliban to this day hasn't

been able over the last year to regain any of the territory that they've lost. we are building afghan security forces that are on track to take the lead for securing the entire country next year. we continue to transition both governments and security to the afghans 100%, but we've also made clear that our commitment to afghanistan as we draw down by the end of 2014 our commitment will continue we are transitioning and we are not leaving and we are maintaining and enduring a presence in supporting afghan forces and

ensuring the mentioned that we were embarked on in afghanistan that al qaeda never again reviews afghanistan to attack the united states or allies. so after more than hot -- [applause] after more than ten years of continuous warfare, deployment after deployment after deployment of our men and women in uniform in the war. the united states is at a critical point of large-scale conflict in iraq and afghanistan are going to end the era of the blank check defense spending is

over and forces will be reduced faces an array of threats in the world even while it is obvious that we do not live in the world where another superpower threatens our military's of pervvijze it is equally obvious that the threats to our security are not receiving as they appear to do in the past war coming out of world war ii, coming out of curry and out of vietnam and the end of the cold war where the threats reseeded. the fact is today we still come from these threats in the world,

threats to our more complex, more dispersed, and in many ways more dangerous to read we've made progress against al qaeda score leaders. we continue to do it in yemen and somalia but we are seeking new footholds throughout the middle east and in countries like moly, north africa lacasa, it remains determined to attack the united states and remains one of the serious threats that we must deal with. north korea, iran continue to pose a proliferation threat and are engaged in activities that are destabilizing northeast asia

and the middle east. the conflict in syria is bringing a violent end to the regime that harbors a large stockpile of chemical and biological weapons and extremists seek to destabilize a nuclear arms to pakistan. increasing military spending by rising powers in the asia-pacific region and the turmoil across the middle east and north africa are all joining the strategic landscape. at the same time, the nature of military conflict is changing. because of the new technologies like cyber and the proliferation of missiles and wmd we are

seeing potential lead for serious state and non-state actors alike acquire or advanced hybrid and a high-end capabilities for to designed to frustrate the edge and dishes of our armed forces. this means the military services must remain vigilant, they must remain strong and they must remain prepared to operate in a way that differs significantly from the past. we will continue to face terrorism and deadly attacks. but we must also be ready for more capable adversaries to attack our forces and our homeland in cyberspace. to attack and launch precision

strikes against the forward bases to attempt to cripple our power grid, our financial systems, government systems, to attempt to deny freedom of action true the attacks. as i said, the goal of the new defense strategy is to help shape the force of the 21st century to try to adapt our forces and operating concept so that we are better prepared for an unpredictable and dangerous future even in the era of constrained resources. we have been determined to avoid the approach taking in the past drawdown some where as i said they were deep across-the-board cuts that hollowed out the force

and a weekend the military from left to the military demoralized and unready to carry out the missions assigned to it. instead, we have set priorities and we've made tough decisions to try to build the force of the future and remain the strongest military power in the face of the year. the strategy consists of the five elements. we have already made significant progress this year towards implementing that strategy. let me describe if i can, the strategy and what we have done. the first element of the strategy is to build a force that is and the small and lean and that is a reality. we are going to be smaller and lean coming out of the last war. but we must ensure that at the same time of the military is

agile, flexible and technologically advanced and prepared to deploy as quickly as we can to come from the crises in the dangerous world. facing the country resources in the drawdown of the troop intensive war the decision to favor in smaller and more ready force over a larger force the will be less well-equipped and less trained. as a result, army and the strength is the way to be gradually reduced to 490,000 soldiers over the next five to ten years. from a high of about 570,000, still well above the force levels that we had in 9/11. in the size of the marine corps will also be reduced slightly to about 182,000 from the peak of

about 102,000 during the past decade. we are also making investments to be capable of more quickly confronting a by a range of press across a more dispersed geography. this past february the navy and marine corps conducted their first large-scale amphibious exercise in more than ten years. in march the army conducted its first exercise in its new decisive action, training environment that emphasizes combined arms maneuver against a combination of your regular and conventional opponents. the second element of the defense strategy is to maintain the force protection where we need. on the east end of the

asia-pacific region. the asia-pacific region is obviously an area of growing importance to with our economy and our security. in the middle east obviously represents continuing threats to our security as well. even after the withdrawal of troops from iraq we've maintained a substantial military presence in the middle east in order to deter aggression, respond to crisis and ensure regional stability in the face of historic unrest and the continuing threats from iran. last week i visited some of the trips based in kuwait part of a robust posture roughly 50,000 troops and dozens of ships and fighters and bombers come advanced intelligence

surveillance and reconnaissance platforms we are partnering closely with of the gulf states to boost the capacity and the critical areas such as missile defense and countermining which will help reduce the pressure to sustain these large deployments over the long term. i also visited the air base in turkey where i announced the deployment of the two u.s. patriot missile batteries as a part of the effort to try to help protect our turkish allies against the threat of missiles from syria. even as we have asserted are strong and enduring commitment to the middle east we are also reeling and expanded engagement in the asia-pacific region the core of the rebalanced is

modernizing your existing network of alliances and security partnership throughout the region into developing new security relations as well. over the past year, we have reached major agreements with japan to realign our forces and jointly develop a strategic hub and we have worked to strengthen cooperation with the republic of korea in space and cyberspace and intelligence. we began the new marine rotational deployment telstra leah as well as increased air force cooperation. likewise we are deepening our engagement and developing rotational deployment with allies and partners such as singapore and the philippines and expanding our milton a dialogue and exchanges with china. we are also enhancing our presence and capabilities in the region.

that includes reallocating the naval fleet to achieve in the next few years a 63 coo 40 split between the pacific and the land goshen's. hopefully we will do that by 2020. the increasing army and marine presence in the region after iraq and afghanistan locating our most advanced aircraft in the pacific including the new plans as f-22 is and the envy 22 to japan. laying the groundwork for the first overseas deployment of the f35 joint strike fighter in 27 tiberi. the strategy is that as we do force projection for in the asia-pacific and in the middle east we still have to maintain our golden leadership and

presence by building innovative partnerships and partner capacity across the globe and using these innovation deployments as a way to do exercises and training with other countries developing their capabilities so that they can help provide for their own security and latin america and africa and europe and elsewhere the past decade of the war the most effective way to address longer-term challenges is to help build a capability of our allies we've seen this approach with our counter insurgency campaigns in iraq and afghanistan and yemen and somalia. we are expanding to partners in order to address a broad range of security challenges in

asia-pacific and the middle east, and as i said in europe, africa and latin america. to implement this element of the strategy, a the service is or retaining the security cooperation capabilities that we had held over a decade of war and making investments in the regional expertise through the army is regionally aligned brigade structure they are able to end fact engage on a rotational basis to assist other countries. the entire u.s. government is working to make our security cooperation particularly foreign military sales more responsive and more effective to cut through the bureaucracy and to cut through the red tape to be able to provide the assistance that we need to other countries without delay. seeking the defense trade with rising powers like brazil and

india. i visited these countries recently to help advance those growing defense partnerships and s carter has also made an effort in the new joint u.s.-india initiative to boost cooperation and trade and streamline our respective out source control process these. in order to remain the security partner of choice, the united states must maintain our decisive military edge and adapt to the emergency threats. the fourth element of the new defense strategy is that we must always remain capable of being able to confront in an easy feat aggression from more than one adversary at that time anywhere, anytime. that means if we are engaged in a conflict on the korean

peninsula and iran attend to close the strength of hormuz we must be capable of being able to respond decisively to both locations. but the strategy that we have developed we believe we have that capability. maintaining our ability to simultaneously operate in multiple theaters by investing in a critical power projection capability is their carrier fleet and the entebbe's fleet and the staging base and strike capabilities. we are also making the investments in the generation bomber. a generation tanker that will afford our air force greater and writing every day to put the joint strike fighter program on affirmative footing. to stay ahead with the growing capabilities of potential let for series and ensure our

ability to defeat aggression we've begun to reexamine our plan to ensure that we are prepared for the most realistic scenarios for the real and unconventional threats and for asymmetric attacks. we are also refining emergency operational concept including joint operational access in the battle that will ensure our ability to project power in areas where our enemies seek to deny us access. and the fifth element, the last element of our strategy is that this cannot just be about cutting back on defense. we must also be able to invest in the future to protect and prioritize key investments through technology and new capabilities as well as our capacity to grow, to adapt and to mobilize as is needed.

throughout the strategy review, i've made clear that this cannot be simply an exercise, budget exercise in deciding where we are going to cut. we've made those decisions and we have looked at reductions in force structure. we have looked at prepare meant reforms. we have looked at compensation. all of those areas were part of our budget proposal to try to achieve the 487 billion in savings. but if we are to maintain the finest military in the world, the finest military force and power in the world we have got to invest in priority missions for the future. for example, despite budget reductions, we are expanding the fleet of unmanned systems. this is the future including the launch surveillance and strike

aircraft in order to boost priority counterterrorism and build partner capacity efforts we are continuing a plan in the special operations forces which will reach 72,000 by 2017, more than double the number that we had on 9/11. we have projected investments in carrying the netz destruction and accelerated testing of mobile air sampling systems and ground sensors for nuclear forensics and we are significantly increasing our cyber the capabilities including our greatest asset manpower. the department is also recently developing rules of engagement in cyberspace that clarify the mission to defend the nation and will enable us to more quickly respond to the cyber threats. we are also protecting our of the two regrow and mobilize a

force. by emphasizing the guard and reserve readiness and protecting a strong industrial base. if we face a crisis, if i have to mobilize, the last thing i can do is to contract that responsibility out to another country. i have got to rely on our industrial security based to be there and be able to respond. [applause] these are the five elements of the defense strategy and the important steps that we have taken so far to implement. as a department we are continuing to refine that strategy, and we will continue to do that to assess the risk that might prevent us from effectively implementing at. but right now as i speak, i can see to principal risks to read the first risk is the stress on the force, which is still operating at a very high tempo

more than 11 years after september 11th. .. that serve this country. [laughter]

we need to ensure -- we need to ensure that servicemembers and their families have the support that they have earned in areas like health and education, employment and they transition back into their communities so that they can be able to go back home and reestablish their ties to their communities. in our budget, we've made a concerted effort to ensure the health of the force in readiness by protecting not rations and maintenance accounts by keeping the fast is the most flexible weapons platforms, high-quality personnel and research in science and technology. but nevertheless, there is pressure in the department to retain access for structure and infrastructure instead of investing in a training and equipment that makes air force agile and flexible and ready. the aircraft ships basis, even

those that have outlived usefulness have a natural political constituency. readiness does not. with smaller, readiness is too often sacrifice in favor of a verdure and less effect disorders. i am determined to avoid that out him. therefore i have directed that readiness be treated as a strategic imperative for the department and we have launched an initiative to assess and improve our readiness across the board. our effort to do everything possible, to ensure a ready force also explains why we expressed concerns about what we saw in the house and senate 2013 defense authorization bills. what they did within their markets and the bills that passed each of the houses,

diverted about 74 billion of what we asked for in saving and her proposed budget to congress. and they diverted them to other areas that frank is we don't need. the final legislation i know is now being negotiated and conference and we are working. i come from the congress, i know the congress will work with burgers there to try to improve it and i'm hopeful we will ultimately arrive at it though that allows us to continue implementing the strategy was designed for delete. we must make every dollar count and we must continue to carefully manage the balance, sustaining current operations cannot be ready to respond to crisis and emerging threats, preparing for future operations and investing capabilities of the future. balancing these things effectively acquires resources and budget stability. which brings me to the site and

at greatest risk facing this new defense strategy. a political assist him that is surprising the department of the budget certainty we need in order to plan for the future. for more than a year, this department has been operating under the shadow sequestration, this mindless mechanism that was put in place an order to somehow force the congress to do the right thing. because of political gridlock, and this department faces the possibility of another round of across-the-board cuts totaling almost half a trillion dollars that will inflict lasting damage our national defense and hurt the very men and women who protect this country. whenever a visitor trips, wherever it is that our chirps, they make clear their concern

about those kind. what does it mean for them and what does it mean for those families? it is unacceptable to me that men and women who put their lives on the line every day in distance lands have to worry about whether those here in washington can effectively support them. we are down to the wire now. and these next two days, congress needs to make the right decision and to avoid the fiscal disaster that awaits us. my hope is that you will do the thing and that we will achieve a bipartisan consensus on deficit reduction enters your great defense spending in the future. otherwise, we will weaken this nation in the minds of our allies, our partners and our potential adversaries.

and undermined the work and sacrifices that our troops are making every single day. it's easy to get cynical and frustrated in this town and after 40 years, i know my level of cynicism and frustration. but my confidence in my hope for the future is restored every time i have the opportunity to visit with their troops on the frontlines as they they did last week. and then i see the spirit of public service that has kept this country strong for more than two centuries, which has helped us to overcome every period of crisis and adversity in our history. that public service is also in evidence here at this monument to democracy, the national press

club. journalist to commit themselves to doggedly pursuing the truth and telling the everyday stories of american people are public servants in their own right. on my last trip, i was honored to be accompanied by cammy maccormack, an award-winning radio reporter for cbs news comes in three years ago suffered a terrible injury from an ied attack while covering the war in afghanistan. it was truly an emotional experience to be with her as she returned back to afghanistan for the first time after that injury. she put her own life at risk in order to tell the story about war and in her in so many other work correspondence, we see the highest ideals of democracy upheld. we have a new exhibit outside the pentagon press briefing room

to honor those journalists who died in the land studio for the past decade of war. alongside more than 6000 american service members who have paid the ultimate price in september 11th, these journalists die to preserve our democracy and the government of, by and for all people. they are heroes, all of them and they know they will remain forever in our hearts and as we continue the hard work of fighting to build a better and safer and more secure future for our children and for the united states of america. thank you ramage. [applause] >> what is your honest opinion on the attacks of 9/11 in this year? the benghazi attacks?

>> the benghazi attacks, you know, i believe there will be a report coming out tomorrow at the pickering group that will obviously present their view of what to place and where the problems were. my sense is that on that day, that when you look at what place in benghazi, that it is -- as i was these kinds of situations come that there's mix here, but clearly with regards to one of the facilities involved a direct attack on that facility. i think that there's no question that extremists were involved in those attacks and i think that we were able to try to respond as best we could at the time. we have learned a lot and will

continue to learn a lot from that incident. i think it's very important progress in an area where people can be exposed to that kind of threat that we be able to respond and respond quick week in order to make sure that doesn't happen again. >> have you seen the benghazi arb and do you support peripherals like vickers for criminal prosecution on basis of leaking classified info to zero dark 30 producers? >> you know, that matters before the ig and i'm not going to comment on it at this time. it was the other question? have i seen -- [inaudible] >> no, i have not. spin that one of the cutbacks of the defense department and the prices to do a service secretary has been duplicated. if this suggestion giving serious consideration and if not, why not? >> way now, we obviously

continue to look at areas where we can achieve efficiencies at the department of defense and there's no question there is duplication. there is overhead in a bureaucracy of 3 million people. there clearly are areas where we can provide greater efficiency. so we were able, bob teets before me begin that effort, achieved about $150 billion in savings. we've added about 60 to 70 billion on top of that in terms of further efficiencies. we'll continue to reveal for greater efficiencies can be achieved. right now i ask that question when i first became secretary. you know, what is the role of the service secretary vis-à-vis the service chief? the reality is there is an important role for them because they are civilians. civilians are involved in providing policy in their areas. they also have to negotiate a lot of the politics of capitol

hill. so there's an important role for them to play in terms of a particular service. having said that, there are a lot of other places where we can achieve savings in the pentagon and we will. >> as the defense department does the downsizing services committee consider cuts to the number flag and general officers? >> again, i think that's part and parcel as he do force reduction. as i said, we are going to be reducing the force structure in the army to 490,000. the reduced the marines as well and i think if that happens, that they've got to review not just the reductions in our troops, but also the reduction in terms of the command structure as well. so they should be part of the

review process as we try to achieve savings in the force reduction. >> have you considered making cuts to your staff? [laughter] yes. i think -- i don't think there should be anything but a sacrosanct when you've got to face the kind of budget constructions that we face. i mean look, i can't almost have a chilling dollars in defense budget, the largest number with cuts in the defense budget would mean a 10 over 10 budget connecticut working on budgets for 40 years. and you know, in order to achieve the savings, we have to look at every area. to me just repeat the areas you have to look at. one is efficiency. he kicked at the thought of efficiency, but you can get some significant savings in a department that large and cutbacks of unnecessary personnel.

number two, force structure reductions. number three, procurement reforms. the whole area of procurement reform is something that action is very well. the fact is we build weapons systems that continue to be delayed, continues to cost escalation, continue to be added to them that attend these these things come out, they lost their usage because we've gone on to another new technology. we need to strengthen our procurement practices than we have. it's also got rid of some of the weaponization that's not needed. and the last area is compensation, which is always a difficult area. the compensation has grown by 80%. i have a health care bill at the defense department and $50 billion. i cannot do justice to everything i've got to maintain the terms of readiness and not try to do cost controls and the conversation area as well. it's another area where we recommend savings as well.

everything has to be looked at if you're serious about trying to achieve the kind of savings we need to achieve in order to address the budget deficit. >> very many wounded warrior center medical assistant today and their number is growing. what is being done to ensure adequate levels of funding remains in the wounded warrior program quiet >> well, i had three guidelines when i looked at having to cut $487 billion. what does we have to maintain the strongest military in the world. two, we cannot howl out the force. we can't just cut across the board. and three, we have to maintain faith with those who defend kuwait time and time again. they savings we achieve in compensation will apply to the future that we will achieve savings looking at retirement program sizzles health health ce programs for the future. but the benefits it promised those who have served, certainly those that have been wounded, i think we need to stand by. so there are no cuts in programs

that serve our wounded warriors and we will make sure they are maintained. [applause] >> trouser fast becoming a vital part of warfare. with adequate defense against an attack on this capital? >> i talked about unmanned systems. the fact is that unmanned systems are increasing in the world that were involved within the united states is one of the leaders in terms of using droned capability and it served us very well, particularly in the fight against terrorism. having said that, we do have to keep track of other countries that decide to get into the uav business and they are. iran, other countries in the middle east are also beginning to develop that capability. we have got to be able to, as

they do, to be able to track what does you uavs are and take steps to ensure the particularly when it comes to surveillance that we can do everything possible to strike to make sure that they are not capable of surveilling but thereafter. that requires a lot of technology and development, but it is an area we are focused on to protect ourselves in the future. >> under what conditions do anticipate further u.s. involvement in syria beyond enforcing a no-fly zone above that the u.s. response to those conditions? >> well, as you know, the effort has been an international effort to bring as much pressure on syria to get aside to step down. our primary effort is dedicated three areas. number one, try to provide obviously humanitarian with these to the large number of

refugees in turkey and jordan and we are doing that. we are providing significant humanitarian relief to try to assist those who have tried to escape the terrible tragedy in syria. secondly, to try to maintain control of the cbw sites and monitor those sites to ensure they do not fall into the wrong hands. so working with other countries in the region, we are making an effort to monitor that situation and to ensure that that does not happen. as a result of that monitoring that we were able to issue a very clear warning to syria not to take the step to make use of any of the cbw or there'll be serious consequences and they still stand by that statement. thirdly, we are helping the opposition. we're not providing medical assistance, but we're providing nonlethal help to the opposition to develop their capability so

that in the event that aside comes down, we'll have identified the leaders who can hopefully provide for a smooth political transition. this is not going to be easy. it requires a strong international effort to ensure this is headed in the right direction. it would be helpful if russia would participate in the effort to try to ensure there is a smooth political transition. >> of its report to congress on afghanistan says insurgent attacks increased slightly this year it is time for the uso had 20,000 troops on the ground. how can security get better in afghanistan assist troops leave? >> well, the reality is that in it. those included there, there was a slight increase in attacks, but the overall numbers if you look at the entire year, the level of violence is down by only 60%. in kabul, almost 50% to 60% and other populated areas where

we've made the transition. violence levels are down. the fact is that the afghan army, the afghan police have gotten much better at providing security in those areas that we transition to. every one of those major populated areas that have been transitioned its now been secured by the afghan army and police and that is the hope for the future. building up that force is a key to our ability to succeed in this mission for the future. we're going to continue. the taliban and is resilient and they will continue to try to conduct attacks. they will continue ied attacks and continue high-profile assassinations. but continue to try to do if they can to draw attention to their efforts. but overall, they are losing. they have not been able to gain any territory they've lost and

we continue to put pressure on them to the afghans in u.s. presence there. that has been in my book the significant turning point in 2011 after the first time we saw the transition work in the afghan army able to do its job and violence going down and that continues to be the trend. >> is a former head of the cia, please explain what general patrice is forced to resign rather than a lesser punishment. [laughter] >> you've got to be kidding me. [laughter] you've got to be kidding me. you know, in this town, with that kind of e-mail coming to think he could have survived as director of the cia? out so. [laughter] spin at the pentagon recently censored navy seals are participating with developers about permission from the mark i went author of no easy day has the best seller. why hasn't the pentagon taken

any steps since his book went on sale in september? >> when you see that one again. [laughter] >> i think on the ceos, obviously the seals have a commitment that if they are going to write about communicative and pass the pentagon and the seal who wrote the book on the events there did not do that and that violates an oath that he took at the time he became a seal. with regards to this other author, i'm not sure it's a situation was, but he didn't really have requirement. >> israeli leaders have said that act against a rams assiduous nuclear program has gone too far. is u.s. went to his considerable financial leverage to prevent a unilateral strike? >> you know, i think the one thing that both the united states and israel i think i've

come to agreement on is the goal with regards to iran. neither country wants in iran that can develop a nuclear weapon. the united states is made that clear. israel has made that clear. the real question is how do we continue to bring pressure on iran not to take that step? the international community has come together. it's come together in a very effective effort to bring sanctions, to bring diplomatic pressure, economic drescher on iran to penalize it for its efforts to develop a nuclear capability. the result of that is to push them to the negotiating table, to see if we can resolve these issues diplomatic route. even the prime minister of israel has said when it comes to dealing with iran that war is to be the last option, not the first option i'm yet to exhaust every effort at determining whether or not diplomatically or

through negotiations we can resolve the issue. we are now in that effort and hopefully that will be debris we resolve it. but please make no mistake if we determine that they've made the decision to proceed with developing a nuclear weapon, the united states considers that to be a red line. >> before it gets the last question, i would like to present you with our traditional npc coffee mug. and makes making those tough decisions that much easier. [laughter] and our version of our medallions going. >> i need to give you a coin otherwise i would owe you a drink. [laughter] >> tantalus of usher golden retriever, bravos role in the osama bin laden operation? >> snf you know, i'm sorry, but i think it was supposed to said he's an irish setter at issue is

not an irish setter. he's a gold retriever. although he's read. he's got a deep breath, great job, great colors. saw dni with b-bravo but i setter institute, we used to bring b-bravo to work with us. when i came back to the shops, you know, i continue to bring bravo to air. i used to bring bravo back with me and he succumbed to the office and i was cia director. pravastatin on almost all of the meetings. involving the operation against bin laden. and today he hasn't told again so it happened. [laughter] [applause] >> thank you for coming today. i'd also like to thank the national press club staff come including including journalists and then institute broadcast

center for organizing today's event. finally, a reminder you can find more information about the national press club on a website. if you take a copy of today's program can please check our website at press.org. thank you and we are assured. [applause] [inaudible conversations] >> one of the things it does surprise me a little. i didn't conduct a nationwide survey of gun owners, but among people who own guns but i talked with, i found very often the reaction, you know, you're way of thinking before and after you've got a gun is very different to. i think any law abiding gun owner realizes when he's got a kind, he or she, that it's a huge responsibility.

if you use this weapon irresponsibly or wrongly, you get yourself into legal trouble of course. you can cause unnecessary misery and death even. he didn't intend to do harm to. it makes you very careful. they should make you very careful. for most people it does, but it would make people more careful if they all had to pass some kind of a test before they get the license to buy. >> you have to do that before you buy a car generally. >> you don't always have to before you get a gun.

>> the pension benefit guarantee corporation is a federal agency that backs private pension plans and pay for pensions for planes that have failed. the director of the pbgc says today that without legislative changes, his agency will not have the resources to back existing multiplayer pension plans. his remarks came at a hearing of a house education and workforce subcommittee. it's an hour and a half. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

quorum being present, subcommittee on labor and pensions will come to order. good morning. it's good to see you again. we appreciate you taking time to be with us this morning. before we began commanded to take a moment to extend my condolences to the people of newton, connecticut. last week an unspeakable act of evil killed 20 innocent children and six amazing adults. change in our country in the community as sandy hook elementary school forever. ..

there is a higher purpose in life than politics, love and our children and extending that love to those who suffered from this is something that i'm certain to join you in with a heavy heart but strong conviction. >> on behalf of the committee asked that we all are members of those who died by observing an ominous silence and please stand. [silence]

you may be seated. i think you for that privilege. now, let's turn to the issue before the subcommittee this morning. today's hearing is our second a paternity in recent months. in june we discussed the politics of governing this system. since that hearing, as reports have reminded us of the problems plaguing many pension plans and the needs for reforms. an iconic american company for more than 80 years to set in november to close its doors and lay of 18,500 workers. hostess participates in for a two multi employer pension plans and the total withdrawal liability, a penalty the company pays could exceed 2 billion. it is uncertain whether that money will be collected and bankruptcy. those employers to remain in the plans will have to provide hostess employees their retirement benefits that they

aren't. regrettably, that story is one that is becoming all too common. an employer withdraws from the pension plan leaving behind unfunded promises. at times this can drive even more employers out of the system toward creating a domino effect that undermines the strength of the individual plan and of the pension system as a whole. these events have a profound effect on workers and also impact the pension benefit guaranty corporation. the federal agency provides financial assistance to multi employer pension plans in distress, irresponsibility that has grown significantly in recent years. according to its annual report pbgc has obligations of 7 billion in future financial assistance and a 57 percent increase since 2011. the agency believes there's a 30 percent chance its multiple employer insurance program will be insolvent in less than 20 years. meanwhile, the total deficient

deficit continues to grow and now stands at 34 billion. maintaining the status quo is no longer possible. provisions in the law governing multi employer pensions will expire in two years to which means congress has an important opportunity to study the system, assess strengths and weaknesses and pursue solutions that support workers without discouraging participation into voluntary pension systems. to do this successfully when the facts as quickly as possible. unfortunately, the administration has a history of delaying factor in slowing the work. for example co it took nearly nine months to get answers to questions submitted by a the committee. after our hearing in february. only now were real to complete the record. of also troubled by to missing reports. these should provide important details on multiple employer pensions, including the sufficiency of current premium levels and the impact of funding rules of small employers. the law requires the reports be

finished by the end of last year and we are still waiting. we're now told to expect reports by the end of this year. congress is ultimately responsible for legislative changes that will improve the long-term health and stability of the multiple employer pension system. we can add to our workers here administration fails to do his job in a timely manner. bynum changes to the law enacted six months after is not an acceptable excuse. the success of a multiple employer pension system depends upon many factors such as a strong economy, practical promises, and a diverse group participating employers. requires policymakers working together on reforms that serve the interests of workers, employers, and retirees. you play a vital role in that effort. i hope you will help us get the answers we need without unnecessary delay and thank you for your service. we look forward to working with you. i have recognized my distinguished colleague, the senior democratic member of the

subcommittee for remarks. >> thank you, and good morning. thank you for being with us this morning, and your service to our country. you're running a very important agency, and and now you're dedicated to that task. it's good that you are you this morning to answer the committee's questions. 10 million americans benefit from a system that has served this country for many decades very well. it is a system where pensions and other benefits are provided, small-business people, contractors, trucking companies, markets, supermarkets and others get together and pool their resources and share costs in order to provide pensions and other employee benefits. this is what is known as the chairman said, the multi employer system. in all cases it involves a collective bargaining agreement that sets the terms and conditions of the benefits that will be given. the system has worked extraordinarily well, and it is

the system that pin million americans rely upon for their pension. it is essentially and fundamentally sound, but there are some significant problems that we must deal with in order to assure its soundness. the graphs that are to my right tell the story of the last few years in this situation. prior to the financial downturn of the first decade of the new century, by and large, multi employer pension plans were exceedingly healthy. we then have the downturn of 2001 followed by the market crash of 20 -- 2008 and nine. if you look at the chart that is to my right, we were in a situation where only 32 percent of malta employer plans were in the healthiest category in 2009. that number has now grown to 60%. so improvement in the economy

and several steps taken by this committee, at that time under the lead of our present speaker helping us to give plan trustees the tools to improve the situation. having said that, the disturbing element of that plan is the red category at the bottom, which indicates that roughly one-quarter of plans are in some significant financial distress. this distress was from a variety of causes. typically the causes that the employer, the trucking company, a supermarket owners, construction contractors are in very difficult segments of our economy. you talk to in the electrical contractor, air-conditioning contractor, trucking company, they will tell you, they have had a very difficult times of the last five or six years. that manifests itself in less money to me into the business, fewer workers being in the fund. the second problem we can all see in our of retirement

accounts. as market values have tumbled also has a retirement account. so the investments in many of these funds have not kept pace with the needs of employees. the third is a sort of demographic tidal wave that i have to take some responsibility for. i was born in 1957, so i am part of the baby boom generation. relatively few workers are in place step pay and, you have more people drying out and fewer people paying in which is a problem we see in medicare and social security, a single employer plans as well. so the task that is before the committee is to think about ways that properly balance the health of the small businesses that make up these plans so that they can continue to thrive and prosper. fairness to present retirees, and a system that protects

taxpayers to the maximum extent so that the promises made by the pension benefit guaranty corporation would never have to step in and reach into the federal treasury in order to help these plans, should that occur. i would hesitate to point out, there is no explicit guarantee from federal taxpayers for these plans. the last five years has certainly shown us that moral hazard exists and taxpayers are very often called upon to make good for promises never explicitly made. our goal as the subcommittee, which the chairman has pursued very diligently for the last year is to make sure that that day never curse when we are in a situation where the 10 million people who are in these pension plans would require any consideration of the taxpayers' debt and help make that problem happen, so i am encouraged that this is the second hearing that

we have had to delve into this issue. i look forward to working with you in the new year to find constructive solutions so that we can in short the continued vitality that the continued security that's a million americans rely on these funds. i yield back. >> i think the gentleman for yielding. pursuant to committee will 7c, all members are doing to provide written statements. would that the record low of 14 days for the submission of official records. it is now my pleasure to introduce the director of the pension benefit guaranty corporation where he has served since 2010. as director, he is response before the agency's management, personnel, organization, budgets, and investment holding degrees from stanford, harvard law school, and from harvard's kennedy school of government. that understand, you have some family members here and would

appreciate your introducing your guests, if you would. [inaudible conversations] >> turner mike on. >> thank you. i am a company this morning in addition to by the very competent staff of the pension benefit guaranty corporation by my mother-in-law who i will say through evidence that bipartisanship with which i think -- >> is not necessarily to swear in this witness will be is no one would fail to tell the truth in front of the mother-in-law. >> yes. and also, my son adam. >> thank you for introducing your guests. you have five ministers present your testimony. the light in front of you will turn green when you begin. when one minute is left the light will turn yellow and when your time expires the level turn right at which point i will ask you to wrap up your remarks.

fd just by members will have five minutes for questions. now, i appreciate your testimony >> members of the subcommittee, thank you very much, thank you very much for holding your prior hearing. a year us rolling this hearing. with your permission i will summarize the main points. want to let start with something which is basic. multi employer plans are important. i come from the business community. employee benefit plans a complicated. one of the real benefits of multi employer plans is they permit several hundred thousand businesses, mostly small businesses in many different industries to provide retirement security without beating in the age our department, just by writing a check. that is a huge benefit. in addition, as mr. andrews noted, for more than 10 million

people and their families, multi employer plans given a pension as portable, that they can take with them from job to job that does not require an end to become an investment expert or an actuary and that gives them an income they can depend on for the rest of their lives without worrying that they or their spouse might outlive the money in their retirement. and, as you can see from the map , to your right and my left, multi employer plans cover businesses and people in every state in the union. i daresay virtually every congressional district. like single employer plans, the last -- investments shrank but missed the not. so the contributions necessarily rose at a time when the businesses had less work and less ability to pay them.

six years ago a bipartisan coalition in congress with the support of the business and labour community passed the pension protection act. that was an important piece of legislation that recognize that not all multi employer plans or like. some plans are healthier and others. the different plants have different needs. they need flexibility. similar coalition recognizing that multi employer plans as well as in the sun will need a greater from -- funding flexibility. where are we today? after all the events of the past decade, the financial health of these plans varies widely. as you can see from that status kraft, there is a wide range of financial conditions.

two years ago, about one-third of all the participants were in plans that reported of a third of 10 million people were in plans that reported they were in green status. today about 60 percent do. excuse me, that's not true. in the information we got a few months, you know, a few months ago as a the beginning of 2011, 60%. so we'd think that is good news. what that means is that a majority of the participants are in plans that are recovering. they are recovering for a variety of reasons, in part because of the market, in part because there are conservative and in part because they move the authorities and in part because of luck. however, a minority of plans,

maybe a couple hundred, lack the necessary economic base. as you can see, that is a smaller set of the population. it is the most. it is a significant number of plans. they lack the economic base. they have your active employees and contributing employers, and those that they do have may be unwilling or unable to cover the cost of retirees, particularly the door for retirees of other companies that no longer contribute to the plan. without changes some of these plans will not be able to avoid insolvency. as in the past, the reason i personally am encouraged, as in the past, multi employer plans, trusties, employers, unions to the professionals and others are stepping forward, looking for solutions that everyone can endorse.

they are changes to allow flexibility, changes to allow distressed plans more robust rules. one effort worth noting is the retirement commission sponsored by the national corn the committee a model employer plans, we have not seen the result of their work. they have been very insistent that they keep government out. they say they will come forward, and we look forward to hearing their results and commenting in analyzing. we think that is the right step. what the congress has always done this working conceptually with the many businesses, small businesses, and the unions that make up small to employer plan said figure out what works. we think they're right step is to hear from the industry itself and then to respond and work with it. at the same time pbgc multi employer insurance program also needs a fresh look.

this is a program which has not been substantially modified in 30 years. the pbgc is now have the same tools farm both employer plans and as for single. they pay lower benefits for multiple employer plans. and they get much lower premiums for multi employer plans and a dozen single employer plans. as a result, unless there are significant changes, but vote plans and in the program and finances, the agency will eventually end up without the tools and resources to help the plans improve, and without the resources to continue to pay benefits for those plans that do fail. i am, has won his princes life working on fixing businesses, an optimist. the next two years provides an opportunity, and opportunity for

multi employer plans, other participants, professionals, businesses and unions to work together to develop approaches that are flexible, practical, and facilitate self-help. that's why we are enormously grateful for the committee's continuing interest. i look forward to hearing your comments to my answering your questions, finally providing the reports that we have voted for a year for which i regret and to working with you to preserve what is a really important form of retirement security for tens of another -- tens of millions of americans. thank you for your testimony. >> appreciate you being here one week before christmas because i felt it was very important, and the reason for that was because that pga sunsets in 2014, and i think both sides of the aisle understand that we have a little bit of a time line with the sunset to get moving, and i was afraid of a put this offer would be into february later getting

this done. i certainly appreciate the multi employer -- the improvement there, and my question is, after reading your testimony, that improvement some what is an improvement in the economy, but is it also the changes in a law that was made in 2010? something happened to allow you to amortize those liabilities over different times, so how much of that is amortizing 15 to 29 years and come much of it is due to the change and a lot of repast? >> you are unquestionably right that part of the improvement is due to the fact that the funding relief allowed plans to stretch out their required contributions as a result, indicators of the stress, some plants no longer -- part of the improvement is

clearly that. it is important to recognize that an important part of the improvement is also that the economy is recovering and that plans really are taking advantage of the authorities that this congress gave them in the pension protection act. unfortunately, the quality of affirmation that we have, the information that the federal government gets this a little old. and so the reason why you have 2011 is because that is the latest affirmation that we have. and so we don't have enough information for me to be able to tell you how much of this is funding relief and how much of this is an economic recovery. >> i was just hoping it was in an accounting gimmick that we did. and understandably, i certainly understand that a downturn, companies need some relief so that they have cash flow to make the pension obligations which is something we have to look at. i think the other thing that i question i wanted to ask was a

multi employer plans versus single employer plans, there's a difference in the premium. i was reading, the financial status strained. your testimony, where it is $9 for participants. with a single employer planet is $42. it looks like that very soon, at least last year we paid out more in the multi employer plans then we took in premiums. obviously we cannot continue to do that. by 2020 or 8-10 years from now you estimate we will be paying about 500 million in plans. i guess the other thing got the last question, how do you propose to change that since you have the premiums on the bringing in 20 percent of what we will be paying out, although it is indexed for inflation. how you propose to do that? recommendations do you make for that? >> that is an important question certain things we know and can

say right now. one is that the situation, as it currently is this, can that work forever. if we have premiums as they currently are, eventually we will run out of money and will be able to pay benefits. however, and this is what we have been wrestling with, it is clear to us that because our program has not been rethought in 30 years, that the changes that ought to be made, some of which will clearly involve higher premiums, i have to say. i'm a finance person. i don't believe in, you know, some of this resolution is going to clearly have to involve higher premiums, premiums that reflect the real cost of this. this is the reason why we don't have a set of recommendations yet that are independent of what you all going to do.

part of the solutions relates to what the plans themselves are allowed to do and can do to form self-help. if plans using the tools that you have given them in the tools that the congress might give them as you consider changes king continued that transformation to lessen less red, then our situation is different. so what we hope to do is, as part of your discussion over the next year to has to have to change some of the employer system in general to work with the congress to develop reforms in the program and finances. >> one of the other questions, and i would like to see what it would be if we had the previous rules. one of the recommendations we will see is, should we assume these accounting rules we passed in 2010 will be the new norm? the other question, i these

assumptions, and have the list of questions i would like answered, send on the return? in other words, do you follow me that that is a pretty lofty assumption these days? and going to not answer that question now. mr. anders. >> thank you, mr. chairman. when do you think we would have results about 2012? i realize that you don't have those in your custody. they are reported by various plans. >> we will know them toward the end of 2013. one of the issues is that the and permission requirements that we have a kind of from the typewriter and carbon paper days console we are in an era -- >> you have to explain those references.

>> sorry. carbon paper. sorry. but we are in an era in which i can do it and send information around the planet in a second. >> let me ask. you have very wisely acknowledged and listened to the collaborative process that has begun among small businesses, unions, experts in this field to enacting that the chairman has done the same thing, and it is a good thing to do. without prejudging what those groups will recommend to let me ask a couple of conceptual questions that i carry as assumptions. the first is that, given the relatively low cost of obtaining money, stretching payments out over amortization schemes has been pretty effective in the 2010 law in helping plans to the greens of.

>> it is very clear that funding relief is an important part of enabling plans. >> is it also correct, if we were to put the hammer down plants in the red zone and say, well, pay up right now to get current, in all likelihood it would seriously impair or kill a lot of these plans. we assumed a lot of employers would just leave. you have the problem of people abandoning and the feeling of even more. the way to kill the goose is too insisted. quicker. >> it is very clear that we can, if we demand that plants -- let me step back one second if i make. we are in our world in which financial markets vary more than they used to. so as a result, plans and

financial status is very more than they used to. if we simultaneously been no world in which the financial status is variable, if we demand that they fund uplands more and more rapidly we're going to make it harder and harder for folks to do that. >> which has the reverse effect of increasing exposure. makes the problem worse from your deficit point of view. >> it raises a risk. >> is it also true that many of these plans in the red zone would benefit from structural internal reform, lower benefits for some participants, higher contributions for some employers to improve there cash position. >> we don't know that details of

the individual plans. a number have come to us and said, we are in a box. the boxes that if we keep on paying the benefits we have we will pay those benefits for five or seven years, whenever the men then we will run out of money, and then you will show teeseven then you will owe them a smaller benefit. and they have said they would like an ability to think about whether or not there are ways to resolve that are fair to them. >> what i think we all should conceptually -- >> but if i may, we have not -- my view of this is, this is very sensitive. this gets to of the guts, if you will, of the law. >> a very hard question. what i think we will have to

start to contemplate conceptually is an arrangement where plans get access to these facilities to help them extend their liability in deal with this in exchange for making some difficult internal decisions which hopefully would have the result of a relatively smaller benefit reduction now, avoiding a much larger benefit reduction down the road. >> i yield back. >> thank you. i now yield to our chairman. >> thank you, mr. chairman, for your indulgence. thank you, director, for being here. what many people in america think other holidays. some of us here in this building maybe not so much the holidays. thank you very much. i have a whole bunch of questions which i will ask. i just want to make it clear that with or without the chart up there, we recognize that there is an multi employer plan

that is in real trouble and that for hundreds of thousands of employees and retirees better in trouble, and we recognize the pbgc has a relatively limited ability that helped them. i very much appreciate the chairman in his diligence in pursuing this. i am determined to keep after this because we have some plans that are spectacularly in trouble in central states, not a secret name here. one multi employer plan alone, you have employers that are in trouble because of these obligations, and you have in that one plant alone hundreds of thousands of employees and retirees that are at jeopardy. so i am hoping that as we wrap up this congress and move in the next congress, we will deal to work with you and with those

outside groups whose input we are eagerly awaiting and to do something about this. i think that the work that we did under the chairman and ranking member then miller was a pretty good stepped. clearly even though the 32-60% looks pretty nice, we know that there are some big, big problems in the multi employer plans that i am eager to get that. as seen mr. miller is here. and now that he recognizes there is a problem, and i hope we can come together and do something about this because it is a multifaceted problem with a limited capability in some plants that are in real trouble. thank you for being here today, and for your testimony work with us as we try to solve this problem. mr. chairman, i yield back.

>> thank you, mr. chairman. a couple of quick questions. with the number of people covered by the plan we essentially have the same charts >> yes. this may be because -- i'm a nerd. what we have done here is showing you the percentage of participants. this is the% of ten plus million people in his plans are in those >> and how would those charged for single plans differ? single plants in trouble? these are any worse than single plants.

>> rather than make a guess about the exact comparison, since the standards are actually different versing new employer plans and multiple employer plans, if i may, with your permission, let me come back with a chart for the record of trying to do an apples to apples comparison. >> when a company with charles on a voluntary basis, they're responsible for their proportionate share of the liability. that is not much of a problem for a solvent company, but when it goes bankrupt and what happens? >> unfortunately what happens in a lot of cases is that the bankrupt company, along with its other obligations, is allowed in the bankruptcy process to eliminate its obligation to its pension plans. >> so he picks it up?

>> in the multi employer world those obligations epic to buy the remaining employers. >> so if a company gets into one of these things, they are in risk of getting everybody else's liabilities dumdum and? >> yes. that is one of the issues that the employers, the hundreds of thousands of employers have continually raised. >> the pension fund really ought to pickup the bankrupt company's share of the liabilities. >> mr. scott, i'll say that over the years there have -- it has repeatedly been suggested to the pension benefit guaranty corporation. you know, rather than having the remaining employers take

responsibility, why doesn't the pbgc take responsibility? and the fact is, the pbgc does not have the resources to take on that that responsibility. the multiple employer plan, the multiple employer system designed 30 years ago did not anticipate that. and so part of the reason why i say that you need to rethink the pbgc program in the context of how you rethink multi employers it because a lot of the suggestions that we did and that i suspect you will get with lean toward saying, well, why don't we let the pbgc -- >> we are suggesting is everyone to do that we have to adjust the premium that they're paying because the coverage is different. >> i don't think this is something which changing premiums alone is going to

resolve. i spent a lot of time with both single and multi employer plans and the sponsors of that and the businesses. some of the rhetoric i get about your premiums are too high is just rhetoric. some of this the very legitimate concern of businesses all across the country that are trying to stay competitive, control their costs and saying, you become too big a piece of my cost. >> i want to get in a quick question. if you could respond to the chairman's comment about how you can chase the return on today's market without unreasonable risk. >> mr. scott. >> i not have an answer for that .

one of the things that we have learned over the last decade is that the assumptions that actuaries made and, by the way, it was not just actuaries. it was not just multi employer plans. people who went through the 1990's tended to think that pension funds could make 9%, 10%, or more, and it looks like it was going to last forever. for the last ten years, as you know, pension funds have not earned 9% commitment% on average . and so we are now in a difficult situation because i don't think there is anyone in knows for sure what you can count on. in so we are -- we don't have a particular recommendation for what a pension plan should do.

we don't think we're smart enough to do that. but we do think that everybody recognizes the fact that the last ten years of been tough and you're going to need test think about what you do for the future and the context of that. >> thank the gentleman for yielding. >> thank you, mr. chairman. last month to as we all know, we decided to liquidate as a result of the bankruptcy. it had participated in, as i understand it, 42 different multi employer plans and to of the company's largest creditors are multi employer plans. the withdrawal from these plans may cost the company of the $2 billion with around $900 million going to the concessionary workers plan and more than 500 million going to the central state plan.

we know that they are very large contributor to these plans and following up to an extent on what mr. scott was questioning, how will there bankruptcy affect these plans and more specifically, does it threaten their solvency? >> as you said, sir, hostess is -- hostess participate san more than 40, the numbers that i got say 41. more than 40 multi employer plans. in some of those plans hostess is a big dog. hostess has been a big dog. in some of those plans hostess is -- has been a more modest participant. for those plans where hostess was a big dog, the fact that they are not -- not going to contribute any more and not

going -- and will be able to a discharge their obligations is going to put those plans then severely distressed status, and some of those plans will probably run out of money. others, plans where they are either stronger or hostess is a smaller percentage participant, continue on. the employers in those plans will say i'm picking up, part of the cost. >> as it happens, the plans for which insolvency is a real risk as a result of hostess, relatively smaller plans,

depending on how you count and have clear you want to be there are four, five, six plans. they are not the larger plants. these are smaller plants. and they are plans that, because they are a larger employer, one of the largest employers is no longer participating, going to be in severe financial distress. the largest plants in which hostess participated are a relatively small percentage of the total, and so what i consider the tragedy is that going to affect them particularly substantially. >> four under and $73 million. of the past four years we have

seen that deficit expand. the howl have demographic trends created this increase? what involvement is demographic trends? >> the fact that people living longer means that pensions, all pensions are necessarily more expensive. it's a fact of life. most -- and as a result the plans that are sufficiently likely on the multi employer side that we have already put on the books, what that means is that as people live longer we're going to end up paying a little more for it. in the broad scheme of things i think demographics, partly

because it is slow and partly because it is long is less of an immediate concern to the integrity of the pension benefit guaranty corporation then the immediate financial or the near-term financial within the next decade, circumstance of the severely distressed plans. and so partly my reaction is, should i be distressed that people are living longer, healthier lives and they cause more? i don't think so. i think that is something we should celebrate. one of the great things about the nation. i think the more immediate concern. >> yield. >> thank you. >> i just want to follow up on something that charren started.

you can't determine what they're rate of return should be and what the risk is going to be on that. don't you think we ought to be a little more conservative and the approach on that as opposed to a seven and a half% return given the history and given the fact that we have to deal with? >> i think it is pretty clear, sir, that's people whose expectations were set in the 90's, reset those expectations , reset those expectations based on the experience we've had in last decade. the reason why i was saying to be cautious about it is, there is a risk of overreacting on the downside in the same way that we may have overreacted on the upside. >> a lot of attention. i guess you will be making more

modest projections with your calculations. >> we actually are not in the business of making projections. and the way we do our books is we use -- excuse my dropping back into the jargon, we market to market, so the way we do our liability is we actually get close from insurance companies about what they would charge in order to pay benefits on what we do, and that is so we do it. we are not in the business of forecasting. >> but you are in the business of forecasting some of those quotes and rejecting others. >> i'm sorry? >> you're in the business of rejecting some and accepting of is when you make debt determination, so i assume you accept those on the more modest side and those who are more enthusiastic given the history. >> yes. >> thank you. the other question i have is

about the hostess debacle. what role can you play when the company takes money from union employees and for contribution to their pension plan and does not make that contribution as well as not making their own company contribution? >> this is, sir, a very tough situation. i have spent my life working in distressed businesses. i've been on the management side and are represented unions, been all-around distressed companies for a long time. and i have learned a couple of things. one is when companies are in distress they take a series of actions to conserve cash. if they are legal.

in the case of bankruptcy you can go to the court and say, not towards my contributions and get court approval for not making a contribution. >> to the stomach and the contribution? >> again city and of the facts. i'm happy to try to up as soon. >> that soon orders possibility do they have? >> i think you have it exactly right. the trustees of the 41 plans in which they participate our creditors. as it happens, hostess has a single employer plan. on the multi employer side we are not the creditors. we're a step removed from it.

>> they stop making the contribution? >> i don't know. let me find out. >> if they did? >> that depends on what their legal obligations are in bankruptcy. >> what about before they get to a bankruptcy? >> if they fail to make contributions beforehand -- >> the contractual obligation a people and the union to pay with the union has designated as $4 some change per hour. plus not making their employer contributions, what obligation is it for the multi player plan to step in and do some enforcement, do something about that? before things go belly up. >> i think the me step back.

when under bankruptcy -- >> your not in bankruptcy yet. before -- >> hostess has been in bankruptcy multiple times in the last few years. >> but there were times there were not in bankruptcy allegedly , they were not making a contribution. before they went back to bankruptcy court where they took it upon themselves to take the money from the employee's those designated cannot put it into the plan plus now make their own contribution. when that is happening what obligation to do something about that? >> that trustees of a plan. >> that pbgc and the single payer plan. >> right. >> can pass. we can act before bankruptcy, and we do. we can go to court and put liens on property in order to ensure

that concretions are made if they are not made. >> that was not done in this situation. >> rather than speculate, i don't i get the facts. >> i would appreciate that if you would. thank you. >> and i yield to mr. thompson. >> thank you, chairman. thank you for being here. thank you for your testimony in this area. one, first of all, with the report that you issued in your testimony, the graph on the third page that talks about future retiree worries, says 1979 based on that graf, obviously significant growth and direct contributions, programs. corresponding decrease in defined benefits. its green and the graph. which is -- our companies have had both.

it seems like that has been pretty stable since 79 proportionally where our company offers but direct benefits and direct contributions. there you go. >> i was just curious. any inside information to make any proportional changes within those -- where companies will both plans, whether it has been kind of a movement toward heavier weighting of direct contributions. >> many employers are deciding that rather than keeping responsibility for the traditional defined benefit plan that they instead would rather pass that responsibility off to

their employees. they do it in a variety of ways. employers will say it said their employees, i know you thousand dollars a month in perpetuity, but wouldn't you rather have -- would you rather have a check for the full amount instead? people go out of the defined benefit system by lump-sum. they do in other ways. from my perspective one of the real challenges, one of the real challenges as the congress thinks about retirement security is out said balance the obligations you put on employers with the obligations. >> my career, we were -- the

first part of that almost 30 years. that was putting us on a path of insolvency as an institution. so there was -- and that all remember the most details. one option. a critical status plans and some seriously endangered plants are severely distressed and will need still further provisions to remain viable. some options for insolvency without exposing taxpayers? >> what they have -- to be honest, the first reaction is why don't they take it over? they ignored the fact that they don't have the resources to do so, so that is my way a backdoor way trying to get to the taxpayers.

what they are talking among themselves and will we expect is that some combination of stretching out obligations, expanding the authorities that congress already gave them that with a broader palette of tools and authorities that they will be able to do self-help. we have not seen the specific proposals, and this is one with a double actually is in the details. we are looking forward to receiving proposals, as i know this committee is. so at that point then we can talk about what we can take. >> at thank the gentleman for yielding. >> thank you, chairman and to

you and your family and staff. i would like to yield the balance of my time back to our children second finish questions. >> at thank the gentleman for yielding. i don't have too many, but in what mr. thompson was saying and also i would like to comment, many because of the uncertainty, i guess, and these plans, and i have a real interest in this to my father was a union member who lost his job in 1973 when i was in the army overseas. his company went out of the country to another country, lost his job and the losses pension plan. fifty years old. world war two, buyout of 10,000, which was nothing after 30 years there. i understand the plight of people who have been promising and it does not occur. you have major plans based on your thinking they're going to have a secure retirement. we have a real obligation to get this right because there are

10 million people out there, families, many retired with -- very an easy right now about am i going to continue to give my benefit. both sides of the aisle understand this very well. probably not allow the people in this congress understand the size of this problem. i know i didn't until i started -- sat in this chair and began to understand that. i saw one of the liability estimates was 27 million, billion. how in the world are we going to find that? current obligations were 5 billion. so how do we get to 27? how do we fix that problem? we have talked about premiums. we both mentioned assumptions. i made the assumption when i retired at 5% would be what i would withdraw. that was more generous than what i should have picked. so your answer.

>> the $27 billion number is an estimate of plans that might, under current law in current circumstances might go -- might fail of the course of the next dictator so. that's an estimate. part of the reason why, frankly, your committee's deliberations, was a hearing matters, there is no one here thinks that it is written in stone that all these plans have to fail. we don't think that. and so what in my view matters is that the congress to what it did in 2006 and what you talked about doing here. on the phone:

this is a train wreck. we need to plan the train ride is what we need to do here.

>> thank you, mr. chairman. i'm sorry that i had to leave for a few minutes. chairman roe and ranking member anders return of securities of greater importance to lives of americans, including me. so i thank you for having this hearing on the challenges facing the multi-player pension fund plan. ambassador gautbaum coming your testimony you indicated multi- plants have been affected by recent declines in the economy and the investment markets as we saw starting in 2007 through 2010. could you elaborate and tell me about the problem of where 10 participants, which are participants for whom there is no longer in lawyer?

at a significant problem for many of these multiemployer plans to do you have any thought on solutions? >> i can describe the problem. i can't tell you there's a standard solution, mr. hinojoa. in a single employer plan, you have one company that is setting aside money to pay benefits for that company's employees and nothing is limited to their employees. surface that market goes down and as a result the plan assets are insufficient, company knows they have to put on an and they're going to know this for their employees. the multiemployer world, you have hundreds of thousands of

businesses, small businesses contributing to a small pool. now there are some very import benefits from that. one of them is that as a result their employees to stay constant when they move from job to job. that's a huge benefit. another benefit, speaking as a person has also worked on this as, you can be a member of the multi-employee plan without having a huge feature department. so it works better for a lot of small businesses. so there benefits to the model, but there are costs. one of the cost of the model is everybody's in it together and so if the plan is underfunded, then the existing leaders are the ones who make up the difference. the issue is that since you had

any employers, enhancing outcomes and small businesses don't make it in some industries a lot of small businesses don't make it. the results since the multiemployer plans, the bill, if you will have been presented to companies who now have most of the employees are not their employees and surveys say we don't like that. that doesn't seem fair to us. now, does that get taken -- and they take into account at that moment that they have in some cases decades and decades cut in benefits of the multiemployer model? obviously not. but that's the crux of the concern that businesses feel that it is unfair to a pay for the obligations of employees

that were not ayers, even now, let's be clear, they have been sharing obligations in some cases for decades and decades. this is not an easy issue by any means. i find it a lot easier to describe what the problem is making to tell you some fair and decent way it. >> time is running out and i wanted to thank you for that explanation. but i wanted to ask you about getting in the shoes of the employee who does not have to go through the human resources committee or department, but yet whatever money is set aside for them, atheists pay for those investing that money and often times the fee can be very expensive in the employee doesn't know just how expensive it is.

number two, this administration cause in the employee again doesn't know how much is being subtracted out of every dollar that it's invested each year for his retirement. how do you handle that and how do you manage it so that it is, such as federal employees using the thrift savings plan how they negotiated cost for the investors and it's very, very low. it's a fraction of 1% per year. that's good, but what about these groups? >> let me answer if they can and mature permission or, i'd like to come back with a response. from their tip, one of the benefit of multiemployer plans is that many, many employers can

hire and pay for a management that can drive hard bargains with investment firms. a management that can get economies of scale that she gets from high many people process without having hundreds of separate h.r. departments. we think there is an important benefit from that. what i can't tell you and don't know is what disclosure there is to the various participants of the cost of those plans. with your permission, seri, let me report on not for the record. >> thank you, gentleman for yielding. >> i think the chair for holding this hearing. i found it very educational and if you look on the mac you can see that indiana is very much effect did by this issue in these multiemployer plans and i

hear about quite frequently as folks are men began a here. some of this absurd event touched on, but at the risk of reiteration of the key to shrill into it more so we are very clear for the record. so number one, i'm reading about the central states pension fund with liabilities of 14 billion. and if i noticed in your testimony or maybe facebook, i saw that your asset r. 1.8 billion. okay, so that concerns me. what happens if and when central state, something terrible happened there insolvency, how many more insolvencies can we sustain before you become insolvent clerks >> part of the reason why i say

that anything that pbgc's on programs is because of issues you raised. it is clear because it had a couple billion dollars in assets and our premiums are prime numbers, $100 million here, bumped up a little with the 120 next year, et cetera. but if we start becoming responsible for several billion dollars a year in pension payments, that we're going to run out of money however. this is the important part. those plans come and it's not just a centrist peace plan. there are in that rent down there probably 200 plans, plans all across the country, not just on the border of indiana, et cetera. what we hear from non-is they

don't want to run out of money. they don't want to become towards both the pbgc appeared they don't want a big trip to pbgc. they would like to have the ability to work out their own self-help numbers. >> get the number of orphan retirees increases. i mean, there's an insolvency issue in retirees and that's where monaco as well to make a loose analogy to social security when mr. roosevelt started their 100 workers for every retiree. another streak going to to in 15 years and it seems to me that these legacy work in retirees, how many to be having a system? do you even know and is it becoming harder and harder to support these retirees obviously with less companies paying into the system. >> in general, as i don't think

we put on the testimony, but in our and her report, systemwide averages about 1.5 people who are not active, retirees will be called deferred vested or active worker. so one point i have to is the ratio. there is areas where it's 10 to one. those plans obviously cannot turn to the active employees and say okay, you're going to increase your contributions by effect or five and go in. something synaptic is. i don't think that anyone can be defended as and say there is a particular masher that you can legislate that will work for all

of the different kinds of plans better they are and that's the point they should've made and i'm grateful for your enabling to make it. part of the reason my flexibility matters, the flexibility team in 2600 why whatever you do prospectively matters is that the circumstance of the folks who are green is very different from the folks who are in the rad and we don't want to force someone into the shoes of the other. >> thank you, chairman. i yield. >> mr. hanna. >> thank you for being here, sir. for the last 10 years, we haven't been to the market. you can see that. but you can see from 2009 july 201111 from 34 to 24. we also know for about a hundred

years the markets returned an average is someplace between 9% and 11% in us as mentioned, these are critical to that. when looking for something that has a positive side and that is tables were filled to guarantee these defined benefit plans those around long-held assumptions that are broken down the last 10 years. in your mind or with your understanding of all this, this year it looks like the market they be up 9% or 10%. how many are suited to to take 90% of the red and put them back in the green? what is historically because there's nothing fundamentally wrong based on the knowledge they have. were looking at the tender spot in saying this is horrible, which of course it is in plans are going broke. this may not last forever either. hopefully it won't be so many people unemployed, et cetera, et

cetera. looking forward, what do you see? >> let me talk in general now and if i may come especially after we get you the reports the ou all, i would like to answer in more detail. there are clearly some plan who even if you think they look at the long-term average equity return, because the experience of the last 10 years has been so bad, they are in trouble and they will be in trouble and just praying for the stock market by itself won't help. it will help some, but it probably won't be sufficient. there are some plans. there are other plans for whom the recovery of the stock market if it gets back to the long-term

average will enable them along with other things to recover. so we know there's some in town and some of the other. if i may come as since this is in part because of the reports that we are working to send you all, after we've done this report, come back and give you a little more detail statement of how many rethink current one versus the other appreciate the opportunity to do that. >> defined benefit plans are great. people are told they have to invest for themselves. as he said, was 34 to one when personnel develop social security now it's different. but that's always going to be the new motto, isn't it? a lot of companies are getting away from defined benefit plans based on the assumptions of the last 10 years and things like mr. made often those things. it's not a bad model, but it's

also true to find benefit plans, really what works best for families in the long run. >> i could not save any better. thank you are saying it. >> i'm all done. >> pathetic attempt to think director gautbaum for taking time to testify before the committee today and i recognize closing remarks from a ranking member, mr. andrews. >> thank you, mr. chairman. i think our colleagues and mr. gautbaum for attending and doing such a good job today. this is a problem we set out on the right path to solve, which is to collect a range of views from a series of people with expertise and learn from them. mr. chairman, i'm confident if we continue down the path we will find these decisions that

achieves the goals of helping small businesses to pay into these plans prosper and grow, that assures the maximum degree of security for pension payments for families who depend on them and approves the fiscal health of the pbgc so we further minimize the possibility the pbgc whatever call upon the federal treasury to make its obligations. what i've learned so far been listening to today's questions and answers in the prior hearing is to credit facilities at the 2006 and 2010 was made available has contributed substantially to the growth of the green sound from 32% to 60%. certainly demographic trends in economic growth have contributed, but the availability of facilities has had a positive impact. i guessable approach discussions at the press that we should

further facilitate those credit facilities to multiemployer plans in a variety of ways, but we should patch conditions depending upon the status of the plan. i think relatively healthy plants should have the opportunity to take advantage of such a facility, but i think i'm healthy plants frankly should have something more in the nature of an obligation to take it into job. and when they do, i think this plan should have become current obligation to make internal structural changes however unpopular or difficult that will improve their health and with it improve the fiscal house of the pbgc. this is not a problem for which the solution will be painless, easy on controversial. but if we take the path to often taken here in washington and hope that it gets better, which is emphatically not what the chairman is doing, then i think

it for sure what they're worse. there are 10 million people depending upon us. there's hundreds of thousands of employers depending upon us and i do think we've taken to very good steps towards a sober while considered a mature approach to solving this problem. i look forward to working with you, mr. chairman and colleagues and mr. gautbaum come to you and your colleagues, and listening to before on the kosher with the state to solve it. i appreciate the opportunity to be with us today. >> i thank the gentleman for yielding and his comments from chair. i'm absolutely committed in the subcommittee is committed to helping solve this problem and it's imperative we do that. there are many pension plans, not only the employer plan, but i think many pension plans in states and others that are extremist now will be looking looking at us for guidance on how we manage through this

morass we are in right now. so you made the comment in your testimony that the pbgc is a risk for having neither sufficient full text most employer can see what their problem, nor friends to pay benefits beyond the next decade under the multiplayer insurance plan. that's a pretty sobering statement. working together certainly work on tools you need to do your job and we can certainly do that. i had several thoughts appear too dangerous to bring them up, no solutions, but we had the assumptions problem about the assumptions we made. is it possible in these plans desegregate? the last man standing will create some issues for the stronger plants, for instance cps decided to get out. they wrote a check for $6 billion got out to the future liabilities. with credit facilities is about

what is to keep a strong come to me after who is a pretty financial balance sheet to look at multiemployer plans and look at the $14 billion liability and the money will run out at some time to walk. i think that's a real issue for multiemployer plans which would further weaken them. ms mr. hanna has clearly stated, once gain the benefit are limited down because people who currently receive in benefits be cut, but as he stated in her testimony come you're going to go back to current employees and say hey, you need to pony up some more money that you may never get. so i think that's an issue and another issue is that the pbgc lines up in bankruptcy. i think this situation is clear that up to firm up the line

line, and place it over there for decades are not at the front of the line. they could potentially beginning in much reduced benefit. doesn't mean that they will. i think a lot of those things are just questions, not particularly solutions, the things we have to work on them we don't have a lot of time to do it. the subcommittee is very active in coming up with legislation to help and i'm interested in knowing how much of the green has been improved by our accounting that we changed the assumptions because i think of .5%, even though i understand the historic assumptions have not occurred in the last 10, 12 plus years. i started this discussion in 2003. it took 10 years, almost 10 years to get there. but if we look at our future liability as the market went down, i make about 10, 11% of

how much salaries going in. as the comic over specific 18% or 19% of their income, which restraining the city budget. so we started the discussion that new retirees if you kept your promise to current employees, the new heidi reese would have the defined contribution plan. many businesses look at that simply because of this. what we end up doing if we do this right and encourage other businesses to stay with the defined benefit plan for employees. i think we have a huge application. i will finish by saying we will miss don payne who served 20 years on this committee and did so with great dignity and tell kildee and dennis kucinich won't be with us on the subcommittee there. mr. cody is retiring to mr. kucinich going on. judy becker would not be here.

it's been a great pleasure to serve a thoughtless member denigrate china. i want to pass my congratulations on to them, to wish everyone a merry christmas. and jason ault meyer. i forgot my friend jason also. he was on and then off and then back on. he did serve. we appreciate his service. i wish everyone a merry christmas. we can go on and on. anyway, we may have to get a whole list to read. anyway, merry christmas, we are adjourned. [inaudible conversations] [inaudible conversations]

samaj [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> if you work for them, he did sometimes generous, sometimes overbearing, sometimes almost cool boss who didn't to apologize, which meant of his age and class, you know, they're not going to apologize for a young private secretary typist

and he had a way of turning the tables and his version of an apology would be to say and the kind man and you're doing a very good job today. but the issue was never settled. he always had to get the last word in. one night going through whitehall, he shouldn't have been out at all and his bodyguard pushed in into a doorway and a couple of thompson's men were slightly wounded. churchill didn't like to be touched and he said thompson, don't do that. thompson said sir, you should be out here. this is dangerous. churchill said i'm only doing this because i know you'd love to.

>> our first experience was to come in a different way her mother family out here. it's interesting because after that was sworn in, we been it took a picture photo of the family behind the oval office desk and that night we didn't get to move into the white house because nixon had been so quick he, so unexpectedly they left their daughter and son-in-law to pack all their clothes and belongings. it literally took seven or eight days. we had to go back sure that a house in, virginia, suburbia, the neighbor has rounded the secret service. we have been living there as bad as president. that night mom is cooking dinner. literally, we are sitting around the dinner table and mom is cooking dinner she looks over at my dad and those jerry, something's wrong